No contract in sight for Houston Methodist and UnitedHealthcare

While health care costs are complex, the massive hospital systems — such as Methodist — hold much of the power.

Photo: Craig Moseley, Houston Chronicle / Staff photographer

With a week left until 100,000 UnitedHealthcare plan members lose in-network access to Houston Methodist’s hospitals and outpatient clinics, there’s still no contract in sight between the health care provider and insurance giant.

“All I can say is we’re still in negotiations,” said Gale Smith, a spokesperson for Houston Methodist.

The two entities have just over a week to reach a deal before the contract ends Dec. 31. The termination, which comes after a two-decade relationship between UnitedHealthcare and Houston Methodist, is expected to affect anyone covered by a UnitedHealthcare employer-sponsored plan or enrolled in its Medicare Advantage program for seniors.

Hundreds of Houston Methodist patients called the hospital in a panic after UnitedHealthcare said in October that it would terminate its contract with Houston Methodist at the end of the year. UnitedHealthcare is also expected to drop roughly 800 doctors at Houston Methodist from its network on April 1.

The issue, of course, is money. UnitedHealthcare, under pressure from employers to hold the line on costs, claims Houston Methodist charges too much and ranks among the costliest hospital systems in the nation.

“While it’s unfortunate that Methodist has been unwilling to actively participate in meaningful negotiations, our members can rest assured that they will continue to have access to high-quality, affordable care from the more than 90 hospitals and thousands of primary care physicians and specialists who are part of our Houston-area network,” a UnitedHealthcare spokesperson said.

Houston Methodist said that the prices UnitedHealthcare has offered to pay are far too low to maintain its quality of care. Third-party data has shown that Houston Methodist is in the middle of the pack when its costs are compared to its peers in Houston. Other research, however, has found that Texas has on average some of the highest hospital costs in the nation.

“We simply cannot accept the insurance company’s demanded rate cuts and compromise the high quality care we provide our community,” Houston Methodist president and CEO Marc Boom wrote in an email to employees on Dec. 16. “United has not presented us with an acceptable proposal since the beginning of the negotiations so I fear an agreement won’t be reached by the January 1 deadline.”

Neither side appears to have budged in its negotiations, accusing the other of being unwilling to come to an agreement.

The prolonged fight between UnitedHealthcare and Houston Methodist takes place as other national insurers wrangle over rates with Houston-area health care providers. Kelsey-Seybold Clinic and Community Health Choice split in October, just days after UnitedHealthcare’s announcement. The clinic ended its contract over what it called “unpredictable and unsustainable” changes in the health insurance market. Some 2,800 plan holders would be affected there.

But Kelsey-Seybold and Blue Cross Blue Shield finally reached a contract agreement in early November, with thousands of plan holders becoming in-network patients again at the clinic starting Jan. 1. Blue Cross and Blue Shield of Texas had dropped Kelsey-Seybold in October 2016.

Cigna, the nation’s fourth-largest health insurance company, said last week that it would terminate its contract with the Memorial Hermann hospital system in March and drop 1,460 affiliated doctors from its network. The termination would affect as many as 178,000 plan members.

Those covered under Cigna’s Medicare Advantage program would not be affected. The contract termination will take effect March 16.

Gwendolyn Wu writes the Houston How To column and about the business of healthcare for the Houston Chronicle through the Hearst Journalism Fellowship. Prior to moving to Texas, she was a metro reporter for the San Francisco Chronicle, where she was part of the award-winning breaking news team that covered the deadly Camp Fire.

Gwendolyn hails from the San Fernando Valley in Los Angeles and graduated from the University of California, Santa Barbara with degrees in history and sociology. She’s an active member of the Asian American Journalists Association. In her spare time, she likes testing new recipes, exploring used bookstores and eating her way through new cities.